At a time when bank and hedge fund speculation, fleeing the securities markets on which it has taken huge losses, has been pouring into the commodities futures markets for metals, foods, and especially oil products, sweetheart agreements between the U.S. CFTC and the British Financial Services Agency has made American commodities futures markets into, essentially, London offshore havens. Greenberger and Cooper laid out in detail, how 35% of West Texas crude futures are traded on a market headquartered in Atlanta, Georgiathe Intercontinental Commodity Exchange, or ICEwhich by CFTC staff actions, is juridically a London offshore market overseen only by the British Financial Services Authority (FSA)! Cooper called the FSA, correctly, "a bad jokelook how it regulated in the Northern Rock Bank case." And oil futures trading on the New York Mercantile Exchange (NYMEX) is now "regulated" only by the London-controlled financial authority of Dubai, under another CFTC staff agreement.
On what are effectively British offshore markets, Greenberger said, a group of banks and hedge funds are simply "continuing and repeating the 'subprime' crash of the securities markets, and all their derivatives, on the commodities markets." He named the investment banksGoldman Sachs, Morgan Stanleyalong with JPMorgan Chase. Some 70% of all oil futures trading in the United States is speculative, Greenberger said, and 30% of all U.S. oil futures trading is being done by Goldman Sachs, Morgan Stanley, and JPMorgan Chase. "I find it highly ironic that when you control the price of oil, you can 'predict' when it will go from $130 to $200 a barrel," he noted, answering Senator Cantwell's question about the "predictions" of $150-200 oill by Goldman Sachs and Morgan Stanley, which around May 20 launched the latest superspike in prices.
These banks and hedge funds are also buying large volumes of oil products and holding them off the market while they play the falling dollar, which continually raises the oil products' price. This hoarding is not just speculation, but manipulation of the market, whose existence is denied by the CFTC and Securities and Exchange Commission. But "the biggest owner of heating oil in the Northeast is Morgan Stanley," Greenberger reported.
(excerpted from Senate Hearings and Executive Intelligence Review)
